Gold falls on profit taking ahead of data
Wed Nov 15, 2006 6:44am ET
LONDON (Reuters) - Gold slipped on Wednesday as a rise in the dollar prompted investors to lock in profits ahead of key U.S. data that might set direction for the currency, dealers said.
Spot gold <XAU=> rose as high as $623.50 per ounce before falling to $617.50/618.50 by 1111 GMT, against $622.10/623.10 late in New York on Tuesday.
"The market feels a little bit overbought. I wouldn't be surprised to see gold and silver coming down in the next couple of weeks," said Jeremy East, head of trading at Standard Chartered Bank.
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"But the fundamentals are still reasonably positive."
The dollar rose marginally against the euro, making gold costlier for holders of other currencies.
The market is awaiting a series of U.S. data that should further help to shape interest-rate expectations, including minutes due on Wednesday from the Federal Reserve's last policy meeting, and consumer prices data on Thursday.
"After a correction in base metals, people just don't have a clear picture about what's really going on. It's going to be a very tight range of $620 to $630," a dealer in Hong Kong said.
Copper led industrial metals lower on worries over supply and demand next year. Nickel prices fell nearly one percent. Continued...
Consolidation remains the short-term theme for gold, particularly with oil locked between $58-60 a barrel and the dollar showing signs of stabilizing," James Moore, analyst at TheBullionDesk.com, wrote in a daily market report.
DULL PHYSICAL DEMAND
The physical sector was deserted, with demand in India, the world's largest gold consumer, slowing down after last month's Hindu festival of Diwali.
"Our sales have gone down by almost 75 percent to 80 percent of what it was during the same time last month," said a dealer in Chennai, a large city in the southern part of India.
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In other precious metals, palladium <XPD=> was unchanged at $317/322 an ounce, while silver <XAG=> eased to $12.72/12.79 an ounce from $12.80/12.87 late in New York.
But strong investor buying of silver, fueled by a popular exchange-traded fund, was likely to take the silver price to $15 in the next few months despite lower fabrication demand, precious metals consultant GFMS said on Tuesday.
Platinum <XPT=> steadied at $1,175/1,180 an ounce after rising as high as $1,182.50, but still higher by more than nine percent from its level a month ago.
Platinum miner Lonmin Plc (LMI.L: Quote, Profile, Research) (LONJ.J: Quote, Profile, Research) said it more than doubled its annual earnings due to soaring platinum prices but its shares fell after the result missed some expectations due to cost pressures.
Lonmin, the world's third-biggest platinum miner, also said it had agreed to buy South African junior AfriOre Ltd (AFOq.L: Quote, Profile, Research) for $441 million as it seeks to expand and did not rule out more acquisitions.
(Additional reporting by Lewa Pardomuan in Singapore and Biman Mukherji in Mumbai)
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